Bestbuy Buys Back. Does it make sense?

Consumers, especially the ones who buy gadgets are facing unique and interesting problems. Today, we are witnessing an incredible speed at which new gadgets are launched into the market. These new gadgets invariably comes with upgraded technology. Secondly, the prices of old electronics drop very fast. If you are buying a Samsung Galaxy S II today, you are going to enjoy the ‘bleeding-edge’ status only for a limited time, after that the novelty fades away and there will be a better and improved piece of technology around the corner! Scientists call this “Buyers remorse” or “Buyers Regret”. Wikipedia explains this concept succinctly. “Buyer’s remorse is the sense of regret after having made a purchase. It is frequently associated with the purchase of big-ticket items such as a car or house. It may stem from fear of making the wrong choice, of guilt over extravagance, or of suspecting having been “snowed” by a sales associate. The anxiety may be rooted in various factors, such as: the person’s concern they purchased the wrong product, purchased it for too high a price, purchased a current model now rather than waiting for a newer model, purchased in an ethically unsound way, purchased on credit that will be difficult to repay, or purchased something that would not be acceptable to others.” To address this problem, To make your purchase future-proof (!), Bestbuy recently launced an interesting marketing campaign – called as “Buy Back”. I found this concept to be an yet another impressive marketing gimmick employed by retailers. And I can assure you that this concept will soon find its way to India – say in another 2-3 years! The “Buy back” plan basically allows you to sell your used gadget or old piece of electronics to Best Buy at a pre-determined price – the price will depend upon how old the gadget is. But there’s a catch. First, you have to ‘purchase’ this plan from Bestbuy by paying the required fees. The amount varies from $10 – 180$ depending upon the gadget type. Few examples are shown below. Laptops and Netbooks – $69.99 Tablets – $69.99 Mobile Phones ($349.99 or less) – $39.99 Mobile Phones ($350 and more) – $59.99 TVs ($499.99 or less) – $59.99 TVs ($500-$1,199.99) – $99.99 TVs ($1,200-$2,499.99) – $179.99 TVs ($2,500-$4,999.99) – $299.99 And when you are ready to upgrade yourself to latest piece of technology, all you have to do is to present this buyback card to bestbuy. You will get some moneyback as per the product age. The detail is shown below:bestbuy-buyback-programSo, lets assume that you buy an iPhone worth $600 from BestBuy. You would have to pay $60 for buy-back protection. So, in total you would pay $660. Let’s say you are ready to return your gadget after 20 months. Bestbuy would give you $120 (20% of $600) for your old gadget. Think about it. You are getting just $60 back for your iPhone because you have already paid $60 for the plan itself. The average selling price for a 20 month old iPhone in ebay works out to $200 – $250. If you take the efforts to sell it at eBay, you stand to get $250 vs $60 if you choose buyback protection. The math would be different when you return it sooner. If you return the gadget within 6 months of purchase, you get $300 (50% of $600) for your old gadget. After deducting $60, you get net $240 back. So, the cost of using a brand new iPhone for just 6 months is $360 (the original $600 minus the $240 you got back)! Buyback program is not without any benefits. What if you are unable to sell your gadget after 20 months? What if your gadget has no value after 20 months (for whatever reason it could be)? In essence, this Buyback program is giving a sense of assurance to you that you can always get some money back for your old gadget – which you can view it as a discount for the future purchases. Also, this plan will suit those early adopters or those lazy people who find it a hassle to sell old gadgets on ebay. Because in the absence of this plan, they would have just locked their gadgets to gather dust in their home. From Bestbuy’s point of view, it’s a brilliant way of locking in the customer. Because they wont give you the cash. Instead they will give you a bestbuy coupon which you can redeem only at bestbuy stores! Secondly, they get their fee upfront. And a dollar today is much more valuable than a dollar tomorrow! Third, bestbuy will surely make money by selling the old gadgets collected from the customers, in a much more organized and scalable manner. As a customer, would you enroll for this plan?Details of Buyback plan

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